Central Bank sells foreign currency in interbank market

On 6 March 2012, the Central Bank of Iceland sold 12 million euros in the interbank foreign market. According to the Central Bank, outflows of foreign currency have been unusually large in the recent term, but the Bank considers this to be a temporary situation. The exemptions from the Foreign Exchange Act that the Bank has granted recently have entailed substantial purchases of foreign currency in the market. The impact of the exchange rate of the krona has been considerable, as the purchases are being made at a time when foreign exchange inflows generated by external trade are at a low ebb, and payments on foreign loans are sizeable.
In a statement released yesterday, the Central Bank noted that it is undesirable that such temporary movements should have a marked impact on the exchange rate of the króna. The Central Bank has previously purchased large amounts of foreign currency from financial institutions in isolated transactions, in addition to its weekly foreign currency purchases. The 6 March action taken is in accordance with the Central Bank’s policy of intervening in the foreign exchange market when necessary in order to mitigate exchange rate volatility.
Further information can be obtained from Arnór Sighvatsson, Deputy Governor at the Central Bank: +354 569 9600